2024 Olympics: Peace or just another salvo in the Laser Wars?
by Richard Gladwell 18 Jul 2019 20:24 PDT
19 July 2019
Taipei jumps out of a big wave - World Laser Championship, Sakaiminato, Japan July 2019 © Junichi Hirai / Bulkhead Magazine Japan
One of the world's most popular sailboat, the International Laser class is less than a fortnight away from a crucial vote on a Rule change in which the Class will determine its Olympic future.
The Rule change has been approved by the World Council for the International Laser Class (ILCA), however, the European Association (EurILCA), issued a letter to its members on July 3, 2019, saying that they did not agree with the proposed class rule change and recommended their members to vote "No".
The majority of the sailors in the Laser class are also members of EurILCA.
One of the protagonists Laser Performance Europe may have gazumped the rule change vote with the announcement today on their Facebook page that they have signed several key agreements :
While we wait for ILCA to set a date to inspect the UK Laser manufacturing facility (time’s a wasting!), we have some good news! We have signed the following agreements and sent them to respective parties to countersign:
- World Sailing’s Olympic Classes Contract
- Commercial Undertaking and Olympic Equipment Fee Policy
- ILCA’s Process for the Appointment of New Laser Builders and Suppliers
We had already signed a Trademark Licensing Agreement with ILCA.
There has been no response from ILCA or World Sailing as to whether they will countersign the four agreements. It has been confirmed that the Trademark Licencing Agreement has been signed by all parties, but with the contentious "constitution control" clauses removed.
Sail-World has queried LPE as to whether the documents were signed and returned by them without alteration or amendment. As yet a response has not yet been received to the query sent late Friday afternoon (UK time).
A week ago, at another meeting at the South Pacific Masters Regatta, Nick Page, the New Zealand Int Laser Association President, who has been close to the action put the chances of a settlement occurring ahead of August 1 deadline at less than 20%.
The latest move appears to be a sea-change from the situation only a week ago on the penultimate day of the 2019 Laser World Championships in Japan, when the Class held the second in a series of informal meetings to update sailors on the situation with the proposed class rule change, which has split the Class.
A similar meeting was held in Rose, Spain at the European Masters Championships where the ILCA Executive Secretary Eric Faust attempted to answer questions and comments put by the competitors, some of whom were also class officials at a national association level.
A third meeting will be held today, July 19 in Japan at the Women's Radial Worlds.
At the meetings in Spain and Japan, it was clear that the European sailors were unhappy with the actions of the International Association. There was a boil over at the end of the meeting in Japan where Faust went after the Chairman of EurILCA Jean-Luc Michon (who is also is a member of the 14 member ILCA World Council).
"There was a democratic vote of the World Council to support the Rule change", Faust said testily. "If Jean-Luc is going to be consistent then he should support that position even though he personally disagrees with it, because the World Council as a Board needs to present itself as a unified vote."
"I'm very disappointed at the position that Jean-Luc has taken publicly against the wishes of the World Council - and I just need to make that clear."
Faust apparently didn't appreciate that had the European Chairman backed the World Council position, then he would be undermining the democratic vote of the European Association of which he is Chairman.
Class Governance an issue for Europeans
It was apparent from an earlier informal meeting at the European Masters Championships in Rose, Spain June 14-20, between ILCA Executive Secretary, Eric Faust and competitors and some class officials, that the dissatisfaction lies over class governance rather than the rule change.
"The Class should not tear itself apart for the Olympics," was a typical comment - maybe harking back to the 20-plus year period, and debates, before the class was put into the 1996 Olympic Regatta.
Originally named the "Weekender" the class enjoyed spectacular growth, prompting the comment at the time that "the Olympics needed the Laser, more than the Laser needed the Olympics".
EurILCA claims up to 70% of the total class membership, ILCA says it is about 63%. The point of contention in Europe is that despite having more than 60% of the membership, European sailors have only two members on the Council.
EurILCA has also always been very supportive of their European Laser builder, Laser Performance Europe. LPE also hold the trademark rights to the "Laser Marks" being the class sunburst insignia, and the word "Laser" used in the class context. Agreements had been signed between the parties back in 1998 which ILCA claimed allowed the use of the Marks in perpetuity.
LPE counter-claimed via social media that it had been seeking a renewal of the 1998 Trademark Agreement which it claimed expired after multiple extensions on August 31, 2019.
The recommended rule change by the Council involves the removal of the requirement for a Builder of a Laser to have "the rights to use a Laser trademark".
[A Builder is a manufacturer that has the rights to use a Laser trademark, is manufacturing the hull, equipment, fittings, spars, sails and battens in strict adherence to the Construction Manual, and has been approved as a Laser Builder by each of World Sailing and the International Laser Class Association.]
The meeting in Japan was addressed by four officials/principals Eric Faust - ILCA Executive Secretary, Hugh Leicester - ILCA Vice President, Jean-Luc Michon - European Region Chairman, and Takao Otani - ILCA Advisory Council Member representing Performance Sailcraft Japan.
Hugh Leicester spoke first and outlined the situation, which was essentially that to remain as an Olympic class, the class association had to be in a position to sign a FRAND agreement (Free, Reasonable And Non Discriminatory) with World Sailing which would open the Class up to a larger number of builders including multiple builders in a territory.
Faust explained at the meeting in Spain that FRAND required that "any interested and qualified manufacturer needs to be allowed to enter the market." Such access is required for the construction of all Olympic classes by the European Commission on Competition.
Currently, the builders are limited to just three - Laser Performance Europe which has the right in Europe, the America's and Asia, except for Japan and Korea. Performance Sailcraft Australia has the building rights for Oceania, and Performance Sailcraft Japan has the rights for Japan and Korea.
Adoption of FRAND by the Class would involve the most change to their business model for LPE, due to the size of its exclusive territory.
World Sailing has decreed that the ability to sign a FRAND agreement has to be in place by August 1, 2019.
"If the class can't meet FRAND, then we're out of the Olympics," Leicester told the Japan meeting.
Since March, ILCA has attracted applications from around 30 builders around the world wanting a Laser class Building licence. Faust expects most of those companies to drop out when they see the full requirements for licenced builders, saying he expects the number of builders to drop to single figures - a similar number of builders as for the Optimist class.
ILCA terminated the building licence agreement with LPE at the end of March 2019, just before World Sailing held sea trials to evaluate and report on options for the Olympic One-Person Dinghy Event. Currently, the standard rig Laser is used for the Men's competition in that event and the Radial rig option is used for the Womens One-Person Dinghy event.
The licence was terminated ostensibly because LPE would not permit factory inspections by ILCA to ensure that boats were being built in accordance with the ILCA construction manual - which is part of the building licence requirement.
For its part LPE says they refused to have ILCA undertake an inspection of LP’s facilities five months before expiry of the 1998 Trademark Agreement and after three years of ILCA refusing to renew its license under the 1998 Agreement.
ILCA officials counter-claimed that LPE had refused inspections in 2016, 2017, 2018 and 2019 and that the last factory inspection was in June 2015. LPE seems to have the view that the Building Licence and Trademark agreements are linked. The proposed rule change gives ILCA administrators the ability to break that linkage.
LPE says that there was no point in having factory visits if ILCA was not prepared to negotiate on its Trademark agreement.
Faust also pointed out that there was a big difference between local ILCA officials visiting the LPE premises, and a proper audit for compliance being undertaken, and that these involved the use of qualified Officials from outside Europe, and could not be arranged at short notice.
To regain its building licence LPE will be subject to the same process as other builders. There is no reason to believe that they would not be successful in this endeavour.
Post-Evaluation Trials machinations
The RS Aero was the top-ranked boat from the Evaluation Trials, but with only 1850 boats at the time worldwide it was no match for the global numbers of 215,000 Lasers, and the Council of World Sailing voted to stay with the Laser and Laser Radial for the 2024 Olympic Sailing regatta.
Mindful of losing its biggest Olympic class, World Sailing has not been idle and has been operating as a mediator between the parties, encouraging them to interact and come to a compromise. The world body for the sport will be well aware that taking a big hit on Universality (geographic spread of the sport) will not be a good look in Lausanne.
Eric Faust claims there are five parties that have to come to an agreement. They are the three builders, plus two other companies - Velum owned by LPE interests who own the Laser trademarks in 85% of the World, along with Global Sailing, a company set up in the late 1990s by the late Peter Spencer (NZL).
To add to the tension, World Sailing required a memorandum of understanding to be signed by the parties before the end of June saying that they were in broad agreement and would be negotiating to achieve a final agreement by August 1. That August deadline was set by World Sailing at its Mid-Year Meeting in May 2019 for all classes to have a FRAND agreement negotiated covering the building of all Olympic classes.
Eric Faust told the meeting in Spain that World Sailing's CEO Andy Hunt had advised that "there was "a lot of space between the parties." Faust says he asked Hunt if an extension of the August 1, 2019 date was possible, but Hunt's response was that it was a Board and Council decision and an extension would have to be approved by both bodies.
It was also disclosed at the meeting in Japan, that New Zealand Laser Association President, Nick Page had devised a settlement arrangement on building fees where a percentage would be paid into a pool, and then divided between the three existing builders.
Page's intention with the pool for it to be recompense for the trademark holders and to help ensure that there was no financial loss for LPE, in particular, as a result of new builders being allowed to enter the European, North American and Asian markets (excluding Korea and Japan).
"LPE would have received, in round figures, 80% of the pool", Leicester said."We were trying to honour the trademark ownership of the three original builders", he added. ILCA Executive Secretary explained that the amount going into the pool was about $500 per boat. The world market for Lasers is reckoned to be about 2000 boats per year. Whether those are economic numbers for an expanded and more price-competitive builder model remains to be seen.
Leicester claimed that being in a situation where all three builders had to agree on a FRAND policy was "a dangerous place [for the Class] because historically the three builders do not agree." He noted that the three builders had taken six years to approve the of the Mk 2 Laser sail, due builder "infighting". Given that he claimed that adoption of a new sail was relatively simple - he asked how long would the opening of the class building licences take?
Earlier at the meeting in Rose, Spain, Eric Faust echoed Leicester's comments pointing out that the parties had been tied up in the US Federal Courts for 10 years. "To think that we can solve 10 years of lawsuits, litigation and disagreements in just one month is a big hurdle to overcome."
"Some might think there is some risk involved with the Rule change, but we are not committing ourselves to any particular action, " Faust told his mostly hostile audience of Masters sailors in Spain.
"It does not require us to change the name of the Class, but it does give us the power to push the negotiations forward and stay in the Olympic Games."
Two issues are separate
A couple of weeks later in Japan, Hugh Leicester (AUS), a Class Vice President said his simple take on the situation was that there were two fundamental issues - the Laser class of sailboat and the Laser brand.
He argued that the two could be split - in that the sailboat could remain in the Olympics regardless of what it was called. In other words, The Laser's Olympic continuance was brand independent.
If the class members wanted to continue to use the name "Laser", then an agreement had to be reached with LPE for its ongoing use in the territories owned by LPE.
If there was a stand-off situation post-August 1, 2019, LPE could continue to sell boats from the same tooling as Lasers it does currently. However, those Lasers would not be eligible for championships organised under the auspices of ILCA.
Already LPE has launched what it calls a "Club Laser". It also sells several other class types that incorporate "Laser" in their class name. Laser Performance also build the Sunfish (also with in excess of 200,000 boats worldwide). LP acquired the Sunfish licence along with the Laser licence for the Americas when it acquired the assets of Vanguard (USA) in 2007.
All existing Lasers, regardless of builder but provided they carry a building plaque from World Sailing have been "grandfathered" and are legal for racing in all class championships.
Under an arrangement between ILCA and World Sailing, LPE were sold 450 building plaques to cover Laser hull production until the time that the LPE Building Agreement was terminated by ILCA. A further 250 plaques were later issued to cover boats built without the Building Agreement. That supply of Building Plaques is believed to have run out, with the prospect that not more would be issued until the legal situation post-August 1 was resolved. The announcement by LPE that it had signed all four required agreements, was made 12 days before the August 1 deadline.
Leicester claimed that LPE had proposed counter agreements three years, however, he claimed the agreements took the position that the Class would have to seek the permission of LPE to hold world championships. "To the World Council, that was unacceptable, " Leicester told the meeting. "We sent probably half a dozen agreements which had 95% of their [LPE] agreement minus the parts of their agreement where they wanted to control the class."
Approval of the proposed rule change was required to drop the Laser name and allow the Class to retain its Olympic statue without it. Or, what Leicester called a "re-branded Laser".
He said that ILCA had signed an agreement with LPE to continue as a builder. While ILCA was still trying to reach an agreement with LPE over the ongoing use of trademarks, however, the rule change was required to give ILCA a second option if an agreement could not be reached on the trademark issue.
That simple class rule change does require a two thirds (66%) approval of the class membership responding within a month, as well as the approval of the World Council and the Advisory Council (consisting of the President and Vice President and two members nominated by the builders who are also trademark owners).
Leicester claimed that LPE was ambivalent as to whether the Laser continued as an Olympic class.
"I travelled to London for a day [nine months earlier], where the owner of LPE sat in the World Sailing office and said, "I don't care if the Laser is not Olympic, I will make more money."
ILCA's position is that while the Class is not dependent of being Olympic, it does want to preserve the progression that goes with Olympic status where sailors start with the Laser 4.7 rig, move onto the Radial rig and then upgrade to the Standard rig - and then go through the reverse process as they move into Masters sailing.
They believe that if the Laser is dropped from the Olympics, that will have the most impact in developing countries where the Laser is often the only Olympic Class sailed. That is turn will start a slow slide for Sailing, and could see it eventually dropped as an Olympic Sport, and replaced with one with better Universality. Currently the Laser and Laser Radial are the two most popular of the Olympic classes with 85 and 69 countries respectively participating in Qualification events for the two Olympic single-handed dinghy classes in the lead-up to Rio 2016.
"To see it [Olympic status] get diminished by parties who won't get together over the question of the Olympics is not acceptable to me," Faust told the Spanish meeting.
It should be noted that on its Facebook page LPE disputes many of the claims made by ILCA about not being prepared to meet with the world body for the Laser.
"We [the World Council] are going to take every possible action and every possible decision to make sure we stay in the Olympic Games for the benefit of our Sport," said Faust.
"We do need to make improvements to our Governance, but those are separate issues [from the Olympic status and Rule change]."
There are two flaws in the Rule change proposal. Firstly the high threshold of 66% to achieve a change, a high bar made even higher by the rejection recommendation by the European Association.
Secondly the date of July 31 for the close of the Class Rule vote, and the fact that World Sailing requires a FRAND agreement in place a day later on August 1.
How all that is going to come together will be a key moment for the Class and the sport.
Rather than being a Win-Win, the situation is more a Lose-Lose. The International Laser Class Association are likely to lose the Rule change vote, as its necessity has been negated by the moves from Laser Performance Europe. Still remaining are questions of the class governance and representation on the World Council.
Outwardly Laser Performance Europe has capitulated, but will live to fight another day, and should remain the dominant builder in Europe. The rest of the world is more difficult for new builders due the difficult and expensive logistics of geography.
The only real winners are World Sailing who has apparently got one of its most difficult builder monopolies across the FRAND line - meaning the other Olympic classes will have to follow suit - if they weren't already as in the case of the Finn and 470.
Other qualified builders are also well positioned to be able to expand their business base, and be able to sell into previously protected territories, if they can attain building licences for the Laser and indeed all other Olympic classes who have FRAND compliance as a requirement. Similarly with the Laser sailors outside Europe who can look forward to having boats supplied by a builder closer to home.
For an analysis of the situation written by ILCA President Tracy Usher (USA) and published in SailingIllustrated.com click here
To see the meeting from Friday July 19, 2019 at the Radial Worlds click here